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Trade Liberalization and Human Capital Accumulation: Evidence from Indian Census

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  • Azam, Mehtabul

    (Oklahoma State University)

Abstract

We exploit the pre-reform employment composition of Indian districts and differential tariff cuts across industries introduced by the 1991 trade liberalization to examine the impact of liberalization on human capital accumulation measured by completion of different stages of schooling and aggregate schooling. Using Census 2011 data, we divide age cohorts that attended school before and after liberalization to implement cohort wise difference-in-difference strategy. We also construct a district-level panel using four decennial censuses that covers 1981-2011 and get an alternative difference-in-difference estimate by looking at the pre and post liberalization outcomes. We find that once we allow for the differential state policies, there is no evidence that the Indian trade liberalization has any impact on either aggregate schooling or on the attainment at different stages of schooling. We find suggestive evidence that positive effect of the increased returns to education was mitigated by the increased opportunity cost of schooling.

Suggested Citation

  • Azam, Mehtabul, 2022. "Trade Liberalization and Human Capital Accumulation: Evidence from Indian Census," IZA Discussion Papers 15286, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp15286
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    References listed on IDEAS

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    Cited by:

    1. Sengupta, Shruti & Azam, Mehtabul, 2022. "The Effect of Trade Liberalization on Marriage and Fertility: Evidence from Indian Census," IZA Discussion Papers 15841, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    liberalization; human capital accumulation; difference-in-difference;
    All these keywords.

    JEL classification:

    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F63 - International Economics - - Economic Impacts of Globalization - - - Economic Development

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